Microsoft ‘Flaw’ Could Lead to Big Opportunity

A ransomware attack took advantage of Microsoft’s operating system, but it could convince more institutions to upgrade their software.

By

Avi Salzman

May 16, 2017 3:03 p.m. ET

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Microsoft could gain if people upgrade their software in response to attacks.
Photo:
Getty Images

A ransomware called WannaCry has infected tens of thousands of computers around the globe in recent days. The malware got control of computers by taking advantage of a flaw in the code for Microsoft’s Windows operating system. The hackers responsible are demanding that the computer-owners pay them money to release their data.

At first blush, the news would seem like a major problem for Microsoft -- more evidence of vulnerabilities in Windows. But Microsoft actually issued a patch for this particular flaw back in March, and people who installed it immediately were presumably unaffected by WannaCry.

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It’s a wakeup call for organizations that are using outdated software, argues Credit Suisse analyst Michael Nemeroff. They “need to accelerate their plans to upgrade to Windows 10, which we believe will bring a large number of new Office 365 Commercial subscriptions, as the correlation between upgrading to Windows 10 and buying a 365 commercial subscription is high.”

Office 365 is Microsoft’s cloud-based subscription software service that is a growing contributor to Microsoft sales.

Nemeroff’s research suggests that a large majority of enterprises (about 85% in a recent survey) have yet to upgrade to Windows 10. “We believe the recent ransomware attack could accelerate the Windows upgrade cycle for enterprises.”

He sees shares rising to $80 from a recent $69.

Big Picture: A ransomware attack could convince more people to upgrade their Microsoft software

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